Business Directories

CS sees early end to subprime crisis

Geneva, February 17, 2008

The worst of the banking crisis resulting from the subprime meltdown is likely to be over in months rather than quarters, Credit Suisse chief executive Brady Dougan has said.

Dougan said he was an optimist and it could take three, four, five months before the crisis bottomed out.

'I believe I can already detect a certain easing of tension in liquidity and credit provision, but the big problems that set off the crisis have not yet been dealt with,' he said.

'There would undoubtedly be much greater confidence if prices in the US real estate market, where the crisis originated, finally stabilised. That could happen as soon as the middle of this year. But we are preparing for the possibility that the crisis continues for some time,' he said.

The crisis has set off write-downs running to more than $100 billion by banks globally. Experts say final losses may reach as high as $400 billion.

Dougan forecast it would remain hard to find buyers for securitised and structured products. Buyers will only appear when the underlying assets have a market price.

At that point there would be a lot interest because of current low valuations, and there would be a prospect of considerable price rises.

Credit Suisse has suffered only limited fall-out from the subprime mortgage crisis, trimming full-year write-downs linked to the debacle to 2 billion Swiss francs ($1.83 billion) and pulling in billions in new investments from wealthy clients.

Its Swiss rival UBS on the other hand has been one of the worst hit, taking $18bc of charges last year and warning of more to come that could tip it into a second year of losses.